Tesla’s ever-changing costs have puzzled analysts and buyers alike in current months, with many questioning how deep are the corporate’s revenue margins.

Whereas that is one thing solely Tesla insiders know, it seems that the EV maker would not thoughts going additional than simply decreasing margins by way of value cuts. On the corporate’s Q1 2023 earnings name on April 19, CEO Elon Musk mentioned Tesla is prepared to sacrifice revenue for increased volumes within the brief time period, reiterating the carmaker’s dedication to cost cuts.

“We have taken the view that pushing for increased volumes and a bigger fleet is the fitting alternative right here versus a decrease quantity and better margin,” Musk mentioned, in accordance with Automotive Information.

Traders and analysts requested Musk greater than half dozen questions on Tesla’s value cuts after the corporate slashed costs six instances this yr alone. In line with Insider, one of many questions prompted Musk to make a surprising admission.

He mentioned Tesla might technically even promote its merchandise for “zero revenue” and that the corporate might as a substitute generate income sooner or later via its autonomous software program. 

“Tesla is in a uniquely sturdy strategic place as a result of we’re the one ones making vehicles that technically we might promote for zero revenue for at times yield truly super economics sooner or later via autonomy. Nobody else can try this. Undecided what number of of you’ll respect the profundity of what I’ve simply mentioned, however this can be very important.”

He added that Tesla expects its autos will have the ability to “generate important revenue via autonomy” over time, noting that it is “higher to ship numerous vehicles at a decrease margin and subsequently harvest that margin sooner or later as we excellent autonomy.”

That mentioned, he reassured buyers that Tesla’s margins stay among the many healthiest within the trade, even after a number of rounds of value cuts this yr for your complete passenger automotive lineup.

Tesla missed first-quarter forecasts for whole gross margin – 19 % in contrast with an expectation of twenty-two % from analysts – whereas web earnings dropped 24 % to $2.5 billion in comparison with the earlier quarter, regardless of a report variety of deliveries within the first quarter – 422,875.

Musk additionally mentioned on the decision that Tesla’s world manufacturing ought to attain between 1.8 million and a couple of million this yr, in comparison with 1.4 million in 2022.

Whereas value cuts could also be good for enhancing quantity, some analysts say they might harm the model over time as sustaining model status whereas concurrently making an attempt to develop quantity is a troublesome balancing act in the long run.